Transferring Property from a Surviving Parent to Siblings

Dear Attorney,

I hope this message finds you well. I would like to inquire about the process for transferring a small piece of property that my surviving mother purchased during her lifetime. She wishes to transfer this property to her children while she is still alive. We are unsure about the legal procedures and necessary documents required for this transfer. Could you kindly provide guidance on how we can proceed with this matter?

Thank you for your assistance.

Sincerely,
A Concerned Heir

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Insights

In the Philippines, the transfer of property from a parent to their children can be done either through donation or by sale. Since the property owner (your mother) is still alive and intends to transfer her property, a donation inter vivos (donation made while the donor is still living) is a practical approach. Below is a detailed explanation of this process and key considerations:

1. Donation Inter Vivos
   A donation inter vivos is a formal way to transfer ownership of a property to another person while the donor is still alive. This is executed through a Deed of Donation, which must be signed by the donor and the donees (in this case, the children) in the presence of a notary public. It is essential that all legal requirements are met, including:

   • Capacity to Donate: The donor must have full legal capacity. In this case, the mother must be of sound mind and of legal age.
   • Consent: The donor must freely give consent without any form of coercion or undue influence.
   • Acceptance by Donees: The children, as donees, must formally accept the donation. This acceptance must also be in writing and notarized.

2. Taxes and Fees
   Donations are subject to the Donor’s Tax in the Philippines. The tax rate varies depending on the value of the property and the relationship between the donor and the donees. However, since the transfer is between a parent and children, a reduced rate or tax exemption for a particular threshold of property value may apply. Ensure that any tax obligations are settled with the Bureau of Internal Revenue (BIR) to avoid future complications.

   In addition to Donor’s Tax, other fees include:

   • Documentary Stamp Tax (based on the value of the property).
   • Registration Fees for recording the transfer with the Registry of Deeds.

3. Legal Documents Required
   For the transfer of property through donation, the following documents are typically required:

   • Deed of Donation, executed and notarized.
   • Acceptance of Donation by the children, also notarized.
   • Certified True Copy of the Title of the property.
   • Tax Declaration from the local assessor's office.
   • Proof of payment of Donor’s Tax and other applicable taxes.

4. Registration of the Property
   After the donation is made and taxes are paid, the Registry of Deeds must record the transfer, and the title to the property will be updated to reflect the names of the children. This finalizes the legal process and makes the transfer official.

5. Important Considerations

   • Reserved Legitime: Although the property transfer is voluntary, it's important to note that Philippine law reserves a portion of a person's estate for their compulsory heirs (e.g., children). Any donation inter vivos should not violate the legitimate rights of the heirs.
   • Revocation of Donation: Donations can be revoked under certain circumstances, such as ingratitude or non-fulfillment of a condition imposed by the donor. Therefore, both the donor and the donees must fully understand their rights and obligations.

6. Alternative Method: Sale of Property
   If your mother prefers, she can also transfer the property by executing a Deed of Sale, where the children buy the property for a nominal price. This is a straightforward process that also requires notarization and the registration of the sale with the Registry of Deeds. However, this method may be subject to different tax obligations, including the Capital Gains Tax.

Before proceeding, it’s highly recommended to consult directly with a lawyer who can review the specific details of the property, draft the necessary documents, and ensure that all legal requirements are met. This ensures a smooth, valid, and legal transfer of property rights.

By following these steps and ensuring compliance with legal requirements, the transfer of your mother’s property to you and your siblings can be carried out efficiently.